Brazil-JBS still looking for beef investments now the National Beef deal is out of the way.
JBS S.A. President Joesley Batista said the company was ready to ride out the global economic downturn, but would still keep an eye out for future investment opportunities.
"We believe that 2009 is a year governed by caution," Batista said in a statement accompanying the company’s fourth quarter financial results.
Batista said JBS will be "conservative on investments" and focus on integrating current acquisitions, increasing productivity and tightly managing working capital to decrease leverage. "Thus, we feel that we will be ready for market adjustments while being vigilant towards investment opportunities which could add value to our balance sheet," he said.
Batista’s statements come on the same day the world’s largest beef company announced it has given up its quest to buy National Beef Packing Co., the fourth largest U.S. meat packer. (See JBS S.A. pulls out of National Beef purchase on Meatingplace.com, Feb. 20, 2009.)
The Brazilian beef giant reported a net loss in the fourth quarter of 2008 of 53.5 million reais ($23 million) and a net profit for the year of 25.9 million reais ($11 million).
U.S. beef results
The Beef Business Unit of JBS USA (including JBS Australia), which generates 47 percent of the company’s total annual revenue, increased its revenue by 22.7 percent to $2.79 billion from $2.27 billion in the fourth quarter of 2007, reflecting an increase in sales volume generated from the Tasman Group and Smithfield Beef Group acquisitions.
U.S. pork results
JBS USA’s pork business in the fourth quarter showed reduced sales volume offset by an increase in the average sales price that resulted in 0.4 percent increment in net revenue. The quarter had one week less than the same period in 2007. Fourth quarter net revenues were down 12 percent from the third quarter.
"Hog costs were negatively impacted by relatively unfavorable hog contracts during the fourth quarter as compared to the third quarter," the company stated.
U.S. plant investments
The company said in 2008 JBS USA’s beef business invested in its plants at Grand Island, Neb., Dumas, Texas, and Greeley, Colo., to improve by-product processing, refrigeration structure and equipment to gain efficiency on the deboning system.
JBS USA’s pork business made investments in its plants in Marshalltown, Iowa, Louisville, Ky., and Worthington, Minn., to improve a pork deboning system that uses carbon gas, a casing plant and a packaging area.
Debt confidence
"The company is secure that even if the present financial crisis has not abated, the company will not have difficulties on refinancing its short term debt," the company stated, but noted the cost of its debt could increase.
